Promise of chips: Chipmaking is more than a seasonal obsession in India now

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18 Jul Promise of chips: Chipmaking is more than a seasonal obsession in India now

Posted at 18 Jul 2026 in Current Affairs, Daily Current Affairs for UPSC, UPSC, UPSC Current Affairs by
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Why in the News?

An editorial titled “Promise of Chips: Chipmaking is more than a seasonal obsession in India now” highlights the significance of the Second Phase of the India Semiconductor Mission (ISM), which has received an enhanced allocation of ₹1.27 lakh crore. The move reflects the Government’s long-term commitment to building a globally competitive semiconductor ecosystem and strengthening India’s strategic technological capabilities.

India Semiconductor Mission (ISM) Phase-II

Key Highlights

  • Outlay: ₹1.27 lakh crore, significantly higher than Phase-I.
  • Objective: Develop a robust semiconductor manufacturing ecosystem across the entire electronics value chain.
  • Support Mechanism:
    • Capital subsidies for selected semiconductor projects.
    • Manufacturing-linked incentives based on production and sales.
    • Additional incentives for firms leveraging domestic technology and capabilities.
  • Focus Areas:
    • Semiconductor fabrication and packaging.
    • Human capital development.
    • Research & Development (R&D).
    • Intellectual Property (IP) creation.

Why Semiconductor Manufacturing Matters

1. Strategic Importance

  • Semiconductors are the backbone of:
    • Artificial Intelligence (AI)
    • Defence systems
    • Telecommunications
    • Electric vehicles
    • Consumer electronics
  • Domestic manufacturing reduces dependence on foreign suppliers and improves technological sovereignty.

2. Economic Benefits

  • Enhances India’s position in global electronics value chains.
  • Attracts investments in advanced manufacturing.
  • Generates high-skilled employment.
  • Promotes innovation-led industrial growth.

3. National Security

  • Semiconductor capability provides resilience against geopolitical disruptions.
  • Reduces vulnerability to global supply chain shocks.

Challenges Highlighted

Technological Complexity

  • Advanced semiconductor technologies (e.g., Extreme Ultraviolet Lithography) remain concentrated in a few countries.
  • Certain frontier technologies are difficult even for advanced economies to master.

Global Competition

  • Developed countries continue to invest heavily through subsidies and industrial policies.
  • Competition for technology, talent, and investment remains intense.

Long Gestation Period

  • Semiconductor fabrication plants require:
    • Massive capital investment.
    • Advanced infrastructure.
    • Years before commercial production begins.
  • Returns on Phase-I investments are yet to be fully realized.

Talent Retention

  • India produces globally sought-after semiconductor engineers.
  • Preventing brain drain and creating attractive research and employment opportunities remain critical.

Opportunities for India

  • Build indigenous semiconductor capabilities.
  • Become a trusted alternative in global chip supply chains.
  • Strengthen AI and digital economy ambitions.
  • Develop domestic intellectual property and design ecosystem.
  • Create a globally competitive semiconductor workforce.

Way Forward

  • Invest continuously in R&D and indigenous chip design.
  • Develop a strong semiconductor talent pipeline through academia-industry collaboration.
  • Strengthen supporting infrastructure such as power, water, and logistics.
  • Encourage domestic startups in semiconductor design and manufacturing.
  • Foster international technology partnerships while building self-reliance.
  • Ensure stable and predictable policy support for long-term investments.

UPSC Mains Value Addition

GS Paper III

  • Electronics Manufacturing
  • Semiconductor Ecosystem
  • Industrial Policy
  • Science & Technology
  • Artificial Intelligence
  • Strategic Technologies
  • Make in India
  • Atmanirbhar Bharat

Keywords

  • Semiconductor Value Chain
  • Chip Fabrication (Fab)
  • OSAT/ATMP
  • Technology Sovereignty
  • Supply Chain Resilience
  • Strategic Autonomy
  • Human Capital
  • Indigenous Innovation
  • Intellectual Property
  • AI Infrastructure

 

UPSC Prelims Practice Question

Q. With reference to the Second Phase of the India Semiconductor Mission (ISM), consider the following statements:

  1. The Second Phase of the India Semiconductor Mission has an outlay of ₹1.27 lakh crore.
  2. The Mission provides only capital subsidies to semiconductor fabrication units and does not include manufacturing-linked incentives.
  3. One of the objectives of the Mission is to promote indigenous capabilities in semiconductor design, research, and intellectual property.

Which of the statements given above is/are correct?

(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

Answer: (b) 1 and 3 only

Explanation:

  • Statement 1: Correct. The Second Phase of the India Semiconductor Mission has an outlay of ₹1.27 lakh crore.
  • Statement 2: Incorrect. Besides capital subsidies, the Mission also provides manufacturing-linked incentives and additional support for products leveraging domestic capabilities.
  • Statement 3: Correct. The Mission seeks to strengthen domestic semiconductor design, R&D, and intellectual property (IP) to build a comprehensive semiconductor ecosystem.
Suhani
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